According to US Central Command, the 2.5-minute video compresses hours of surveillance footage taken on March 29 at the height of Iraqi military's struggle to liberate the western part of Mosul from the extremist group.
It allegedly shows Daesh combatants establishing fighting positions and firing at Iraqi security forces from a building where groups of women and children are being escorted through an enclosed courtyard.
"Our Iraqi partners and CJTF [Combined Joint Task Force] have seen the tactic of ISIS [Daesh] intentionally placing civilians in harm's way," US Central Command's spokesman said in a statement, adding that the coalition didn't respond with an airstrike against the position because it was evident from the video that civilians were present.
The video has been released amid international criticism towards the US-led coalition following a series of airstrikes that caused large-scale civilian casualties in Syria and Iraq, including a March 17 strike that hit a building in west Mosul and killed up to 200 noncombatants, according to Iraqi media.
Airwars, a nonprofit that tracks civilian deaths, said it has recorded a rise in reported casualties beginning around the end of 2016. It has tallied more than 3,000 alleged civilian casualties in Iraq and Syria.
The reports about mounting civilian casualties prompted human rights advocates and other critics to question whether US President Donald Trump has relaxed requirements that prevent civilian deaths.